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TAX & BUSINESS
Real Estate Transfer Tax on the Transfer of Factory Buildings
According to the tax office, the construction cost factor must be applied uniformly to all buildings of a factory, as all buildings are assigned to the production process and therefore no differentiation of the buildings is required. The Administrative Court (VwGH) confirmed this view.
When calculating the land value relevant for the determination of real estate transfer tax (real estate transfer tax, GrESt), there are various interpretative possibilities due to the complex provisions and differing terminology.
Real estate transfer tax (GrESt) is generally calculated on the basis of the consideration value, but in any case on the land value. In gratuitous acquisition transactions or in the transfer of all shares in companies that own land, the assessment base for GrESt is always the land value. This land value is derived either from the real estate price index or from the land value regulation, whereby the land value according to the land value regulation is the sum of the value of the land itself and the value of the building.
Construction cost factor by federal state
For the building value, a construction cost factor is prescribed for each federal state, which is to be applied as a certain percentage depending on the type of building: 100% for buildings used for residential purposes, 60% for factory, workshop buildings and warehouses that are part of the economic unit of a factory site, 25% for the simplest buildings (e.g. glasshouses, cold halls, equipment sheds or garden houses not suitable for year‑round habitation) and for provisional construction, and 71.25% for all other buildings.
Uniform construction cost factor for all buildings
In a recent case before the Administrative Court (VwGH), the tax office and the taxpayer held differing views on the calculation of the building value for a factory building.
A GmbH acquired in 2017 all shares in another GmbH that was engaged in building‑material production and owned land. By acquiring all shares, a real estate transfer tax event was triggered and the land value was calculated according to the land value regulation. In doing so, the construction cost factor was applied by some to 60% (factory building) and by others to only 25% (simplest buildings).
Economic unit of the factory buildings
The tax office, however, argued that the construction cost factor should be applied at 60% for all buildings, because all buildings are assigned to the production process and therefore no differentiation of the buildings is required. The VwGH confirmed the tax office’s view in the appellate proceedings, stating that there is no differentiation of the buildings, and reasoning that the buildings are part of an economic unit of a factory building and therefore the construction cost factor must be applied at 60% for all buildings. The specific characteristics of the individual buildings are not decisive.
Conclusion
The calculation of the land value as the assessment base for real estate transfer tax can be carried out in several ways and should be taken into account and tax‑optimised when transferring land, as well as when transferring shares in land‑owning companies.
Real estate transfer tax (GrESt) is generally calculated on the basis of the consideration value, but in any case on the land value. In gratuitous acquisition transactions or in the transfer of all shares in companies that own land, the assessment base for GrESt is always the land value. This land value is derived either from the real estate price index or from the land value regulation, whereby the land value according to the land value regulation is the sum of the value of the land itself and the value of the building.
Construction cost factor by federal state
For the building value, a construction cost factor is prescribed for each federal state, which is to be applied as a certain percentage depending on the type of building: 100% for buildings used for residential purposes, 60% for factory, workshop buildings and warehouses that are part of the economic unit of a factory site, 25% for the simplest buildings (e.g. glasshouses, cold halls, equipment sheds or garden houses not suitable for year‑round habitation) and for provisional construction, and 71.25% for all other buildings.
Uniform construction cost factor for all buildings
In a recent case before the Administrative Court (VwGH), the tax office and the taxpayer held differing views on the calculation of the building value for a factory building.
A GmbH acquired in 2017 all shares in another GmbH that was engaged in building‑material production and owned land. By acquiring all shares, a real estate transfer tax event was triggered and the land value was calculated according to the land value regulation. In doing so, the construction cost factor was applied by some to 60% (factory building) and by others to only 25% (simplest buildings).
Economic unit of the factory buildings
The tax office, however, argued that the construction cost factor should be applied at 60% for all buildings, because all buildings are assigned to the production process and therefore no differentiation of the buildings is required. The VwGH confirmed the tax office’s view in the appellate proceedings, stating that there is no differentiation of the buildings, and reasoning that the buildings are part of an economic unit of a factory building and therefore the construction cost factor must be applied at 60% for all buildings. The specific characteristics of the individual buildings are not decisive.
Conclusion
The calculation of the land value as the assessment base for real estate transfer tax can be carried out in several ways and should be taken into account and tax‑optimised when transferring land, as well as when transferring shares in land‑owning companies.